Fougere Realtors, Inc

Fougere Realtors, Inc.

Performance Report

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For the year ended December 31, 2007

Budget Actual Variance

Number of home re-sales 180 202 22 F

Variable expenses

Sales commissions $1,102,950 $1,205,183 $102,233 U

Automobile 36,000 39,560 3,560 U

Advertising 171,000 192,690 21,690 U

General overhead 656,100 716,970 60,870 U

Total $1,966,050 $2,154,403 $188,353 U

Fixed expenses

General overhead 60,000 62,300 2,300 U

Total expenses $2,026,050 $2,216,703 $190,653 U

Required:

a) Explain the major weakness of this performance report and why all the variances for the variable expenses are unfavourable (U) (5 marks)

b) As a first step in helping Chris Fougere to evaluate cost / expense control in the organization, complete the following for the year ended December 31, 2007, assuming the only cost driver is the number of home re-sales. (Note: Indicate any variance as either favourable (F) or unfavourable (U).) (15 marks)

Budget Actual Variance

Number of home re-sales 202 202 0

Variable expenses

Sales commissions $ $ 1,205,183 _________

Automobile $ _________ 39,560 _________

Advertising $ _________ 192,690 _________

General overhead $ _________ 716,970 _________

Total $ _________ $2,154,403 _________

Fixed expenses

General overhead $ _________ 62,300 _________

Total expenses $ $2,216,703